...CHAPTER ONE: ANSWERS TO REVIEW QUESTIONS AND PROBLEMS 1. Globalization refers to the openness and the free exchange of goods, services, resources, technologies, capital, and ideas around the world. Globalization is important because it increases efficiency; it is inevitable because international competition requires it. The anti-globalization movement blames globalization for increased world poverty and income inequalities, child labor, environmental pollution and many other problems. 2. Nations usually impose restrictions on the free international flow of goods, services and factors. Differences in language, customs and laws also hamper these international flows. In addition, international flows of goods, services and resources may involve receipts and payments in different currencies, which may change in value in relation to one another through time. International relations are to be contrasted with the interregional relations, which face no such restrictions as tariffs and are conducted in terms of the same currency, usually in the same language, and under basically the same set of customs and laws. 3. A rough measure of the degree of economic interdependence of a nation with the rest of the world is given by the ratio or percentage of its exports to its gross domestic product (GDP). For small, developed nations, such as the Netherlands and Belgium, the ratio can reach as high as 60 to 90. For large nations, such as Germany, England, France and Italy, the ratio...
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...Abstract Over the past few decades, the global scenario has changed considerably with increased interdependence amongst nations and economies. This intertwining amongst nations and sharing of ideas and technology has been termed as “Globalization”. Globalization has been a buzzword of late, with heated discussions about its pros and cons. Some consider it to be a blessing for mankind while others take it as a curse. For some it has brought about material prosperity while others have become unemployed due to it. This paper tries to analyse the effect of Increased International Trade and Globalisation on the US economy. The first section discusses the pros and cons of Globalization while the second section discusses how globalization has lead to increased foreign trade. Thereafter, it discusses the effect of globalisation and increased foreign trade on the American economy. Introduction Trade is believed to have taken place throughout much of recorded human history, whether as barter or in exchange of currency. Till the 1800’s, trade was limited due to difficulties in transportation, communication and restrictive trade policies. However, in the mid 19th century, with advent of free trade and nation advantage concepts, trade started to pick up (Daniels & Sullivan, International Business and Operation). Although international trade has been present throughout much of history, for example Silk Route, its economic, social, and political importance have increased in recent...
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...Chapter 1 What is international Business Key Concepts In International Business * International Trade - describes the exchange of products and services across national borders * Exchanges can be made through exporting or can also take the form of: * Importing or Global Sourcing - the procurement of products or services from suppliers located abroad for consumption in the home country or a third country. * International Investment - refers to the transfer of assets to another country or the acquisition of assets in that country. Economists refer to such assets as factors of production and they include capital, technology, managerial talent and manufacturing infrastructure. * Foreign Direct Investment - is an internationalisation strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as land, plant, equipment, capital and technology. It is a foreign-market entry strategy that gives investors partial or full ownership of a productive enterprise. * International portfolio investment - refers to the passive ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns. International portfolio investment and foreign direct investment are the two essential types of cross-border investment. The Nature of International Investment Foreign direct investment (FDI) is the ultimate stage in internationalisation and encompasses the widest range of international...
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...Lecturer in Economics, Australian Catholic University Globalisation is not new. Australia has been involved in trade, investment, financial flows, technology transfers and the migration of labour since its foundation as a colony. What has changed is the size, direction and influence of these transfers, especially since 1980. There are a number of factors that have aided this transformation. They include: • The expansion of new markets – foreign exchange and capital markets are linked globally. They operate 24 hours a day with dealings any where in the world possible in real time. Financial deregulation and the floating of the Australian dollar since 1983 intensified the impact of globalisation on the Australian economy. • New technology and the tools of globalisation – the internet, email, mobile phones, media and communication networks have all sped up the process of globalisation. They have increased the spread and speed of knowledge transfer and communication. Australian consumers can buy products from any nation in the world, transfer funds between accounts or purchase shares in any major market. Australian businesses can market their products at a fraction of the cost and be exposed to a global market place of competition. This potentially is the closest we will ever come to the perfect market. • New institutional players – The World Trade Organisation (WTO) has growing authority over national governments, as does the IMF with its restrictions and controls it...
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...coordination. Here this video is supported by two cases such as Strict fiscal and monetary policies of US in 1985 and the other is UK joining in European monetary system [1] Managed currency The majority of major world currencies are managed at least to some degree. This is due to the purchase and sale of these currencies by the central banks of different countries. They do this in order to stabilize the international money markets and affects their own monetary policies. Why managing currencies? a. Reduce currency fluctuations If the value of currencies fluctuate significantly this can cause problems for firms engaged in trade. * For example if a firm is exporting to the US, a rapid appreciation in sterling would make its exports uncompetitive and therefore may go out of business. * If a firm relied on imported raw materials a devaluation would increase the costs of imports and would reduce profitability. b. Stability encourages investment. The uncertainty of exchange rate fluctuations can reduce the incentive for firms to invest in export capacity. Some Japanese firms have said that the UK’s reluctance to join the Euro and provide a stable exchange rates make the UK a less desirable place to invest. c. Keep inflation Low Governments who allow their exchange rate to devalue may cause inflationary pressures to occur. This is because AD increases, import prices increase and firms have less incentive to cut costs. [2] From the...
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...Europe and the rest of the world. Bretton Woods institutions were created in 1944 during the United Nations Monetary and Financial Conference at the Mount Washington Hotel (The Bretton Woods Committee, n.d.). The Bretton Woods institutions created an international basis for exchanging one currency for another. It also led to the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, now known as the World Bank (Stephey, 2008) and the General Agreement on Tariffs and Trade (GATT)—the precursor to the World Trade Organization (WTO). In addition to establishing the World Bank, the Committee chose the U.S. dollar as the pillar of international monetary exchange. The meeting provided the world post World War II currency stability which was desperately needed. The Bretton Woods system itself may have collapsed in 1971, when President Richard Nixon severed the link between the dollar and gold — a decision made to prevent a run on Fort Knox, which contained only a third of the gold bullion necessary to cover the amount of dollars in foreign hands. By 1973, most major world economies had allowed their currencies to float freely against the dollar. It was a rocky transition, characterized by plummeting stock prices, skyrocketing oil prices, bank failures and inflation (Stephey, 2008). However you spin it, Bretton Woods established the United States as the leader and the leader of the new post Second World War economic order. Times...
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...debate is back! Indeed, the notion that the health of emerging markets is no longer determined by the ups-and-downs in developed economies -- or even that emerging markets may be insulated from global shocks -- has been in vogue of late. Last fall, the collapse of Lehman Brothers and the ensuing stock market crash dragged down emerging markets: decoupling seemed dead. Now, pundits who recently mocked the hypothesis are starting to wonder aloud if there might after all be something to it. The IMF forecasts that advanced economies will contract 3.8 percent in 2009; emerging economies are expected to post 1.6 percent growth this year. And international investors are flocking to emerging markets, which have beat those in developed countries by nearly 50 percent in the past six months. Yet, neither the synchronized turndown nor uneven rebound is sufficient to prove decoupling true or false. The term is amorphous, and perhaps best used as a Rorschach test for the proclivities and interests of its wielder. But the underlying concept has staying power. And certain aspects of the decoupling hypothesis are important to examine, to see what they portend for the future of the global economy. First, there is a good deal of confusion about the distinction between cross-country synchronization of financial markets and economic activity. With capital and news flowing more freely and quickly across borders, stock markets around the world are increasingly synchronized. This makes it highly unlikely...
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...coIn 1950, there were 49 countries with stock exchanges, 24 were in Europe and 14 in former British colonies such as the United States, Canada and Australia. Their usefulness was seen as limited to only the wealthier countries in which they resided. Developing countries had low levels of savings and limited means to attract foreign capital; stock markets played an insignificant role in their economic growth before the 1980s. Funding for economic capital came primarily from foreign aid, state-to-state from advanced industrial countries to developing economies during the 50’s and 60’s. During the 1970s there was an increase in private bank long-term lending to foreign states that nearly equalled state aid, and as Keynesian ideas came into disrepute due to stagflation. In 1982 when Mexico suspended its external debt service, it marked the beginning of the debt crisis throughout the developing world; banks severely limited lending to developing nations. The IMF and the World Bank supported stock market development not solely on the grounds of ideology but rather that the stock market is a natural outgrowth of a developing financial sector as long-term economic growth proceeds and also as a criticism of early development efforts through Development Finance Institutes (DFI) . These DFI’s had difficulties during the 1970s economic crisis of the third world. Singh cites the World Development Report of 1989 that the poor performance of these DFI’s was due to the “inefficiencies of these...
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...| | SHANGHAI FINANCE UNIVERSITY SCHOOL OF INTERNATIONAL ECONOMICS AND TRADE [pic] DEPARTMENT OF INTERNATIONAL ECONOMICS AND TRADE INTERNATIONAL MONETARY SYSTEM The History of IMS and its Potential Reformulation Introduction to IMS, Evolution of IMS, Beginning of Bretton Woods and Ending, Dirty floats, Current situation and Reformed Monetary system WINNIE PAUL NDOSA (2011178102) 12/24/2013 |The History of IMS and its Potential Reformulation | | | |Introduction to IMS, Evolution of IMS, Beginning of Bretton Woods and Ending, Dirty | |floats, Current situation and Reformed Monetary system | | | |WINNIE PAUL NDOSA (2011178102) | |12/24/2013 | Introduction The year 1252 marked the minting of the very first gold coin in Western Europe since Roman times. Since this landmark, the international monetary system has evolved and transformed itself into the modern system that we use today. Th...
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...THE ROLE OF GLOBALIZATION IN THE MODERN ECONOMY GLOBALIZATION DEFINED Over the past several decades, the economies of the world have become increasingly linked, through expanded international trade in services as well as primary and manufactured goods, through portfolio investments such as international loans and purchases of stock, and through direct foreign investment, especially on the part of large multinational corporations. At the same time, foreign aid has increased much less in real terms and has become dwarfed by the now much larger flows of both private capital, and remittances. These linkages have had a marked effect on the developing world. But developing countries are importing and exporting more from each other, as well as from the developed countries, and in some parts of the developing world, especially East Asia but also notably Latin America, investments have poured in from developed countries such as the United States, the United Kingdom, and Japan. Globalization is one of the most frequently used words in discussions of development, trade, and international political economy. As the form of the word implies, globalization is a process by which the economies of the world become more integrated, leading to a global economy and, increasingly, global economic policymaking, for example, through international agencies such as the World Trade Organization (WTO). Globalization also refers to an emerging “global culture,” in which people consume similar goods and...
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...| | | SCHOOL OF BUSINES Project on: Balance of Payments Prepared By: Hassan ajami, Mansour daher, reda younes,ali Mohsen, Mohammad kanso Submitted To: Dr. habib awada Course BFIN 430 (International Banking & Finance). Spring 2013-2014 TABLE OF CONTENTS 1- INTRODUCING THE BOP CONCEPT: 1.1) Brief History 5 1.2) Basic Definition 5 1.3) System of Recording 7 1.3.1) Identifying Transactions 7 1.3.2) The Debit & Credit System 9 2- GENERAL STRUCTURE OF THE BOP: 2.1) Main Components 12 2.1.1) Current Account 12 2.1.2) Trade Balance 15 2.1.3) Capital Account 16 2.1.4) Financial Account 18 2.1.5) Errors & Omissions 22 2.2) Complications 23 2.2.1) Accounts Interrelation 23 2.2.2) Deficit & Surplus Dilemmas 25 3- BOP FROM EQUILIBRIUM TO DISEQUILIBRIUM 3.1) BOP in Equilibrium 27 3.1.1) Equilibrium Conditions 27 3.1.2) Equilibrium Model 27 3.1.3) Types of Equilibrium 29 3.2) BOP in Disequilibrium 29 3.2.1) Causes of Disequilibrium 29 3.2.2) Types of Disequilibrium 32 3.2.3) Consequences of Disequilibrium 33 3.2.4) Measures to Eliminate Disequilibrium 33 3.2.5) Demonstrating Disequilibrium 35 4- STUDYING THE LEBANESE BOP 4.1) Historical Events: 1999 and before 37 4.2) Major Events of the Decade: 2000-2008 38 4.3) Recent Events: 2009-2010 40 5- CONCLUSION Importance of BOP 44 1- INTRODUCING...
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...springing from the inter-linkage of diverse economies worldwide. However, the evolution of the world economy has occurred so rapidly that it has outpaced its regulators (Schwab, 2012). The International Monetary System, in accordance with its mayor international currencies, has been faced with a myriad of challenges. In this era of free global trade, the present dollar-based system is being forced to change (Schwab, 2012). With much speculation and evolving ideals, the most plausible solution has been the multipolar currency system based on the euro, dollar, and RMB (Schwab, 2012). In order to ensure a crisis-proof economic system, however, some economists believe this tripolar system must be backed by a Central Bank, an improvement in monetary regulations, and perhaps an induction of gold as a hedge and safe-haven asset. Introducing a World Central Bank within a three-currency monetary union: would this lead to greater stabilization and coordination of Macroeconomic Policies among countries? Some countries such as Germany have expressed interest in researching new alternatives to the existing rate regime, considering that neither of the two poles (fixed or flexible) are completely appropriate (Belke, Bernoth and Fichtner, 2011). According to Belke et al, the best and most suitable system would be one with only a few big currency areas, interconnected to each other by flexible exchange rates (Belke, Bernoth and Fichtner, 2011). Furthermore, the best “multi-polar key currency...
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...SEMINAR IN INTERNATIONAL BUSINESS ( DRS 3283 ) Name : Norsyafinaz Binti Shah Rizal Thomas ID No : 012011110183 Lecturer name : Sir Anuar Sulaiman A research paradigm for international business communication On this journal that can sumarize with this conceptual paper aims to present a research paradigm for international business communication research, with special reference to the problems of Japanese corporations and to develop a paradigm, the obstacles Japanese corporations face in international business as methods used to deal with obstacles and foster bettel global mangement and interculture comunication. International business prescribes the “arena” for international business communication and is shaped by international business transactions and international management. The reason for this is found in the special characteristics of international business transactions. The beginnings of international business transactions were nothing other than trading between cultures and peoples with different commercial practices. On the second point arena of international business communication and illustrates the following situations although we are speaking of international business communication or Intercultural business communication, it does not necessarily mean that this Communication occurs between countries, cultures, or businesses. the agents of international business communication...
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...capital markets, as well as, the escalating interdependence of the economies of different countries in regards to the markets of goods and services. Economists describe globalization as a universal unification of the commodity, capital and labor markets (Bordo et al., 2003) Baghwati states that “economic globalization constitutes integration of national economies into the international economy through trade, direct foreign investment (by corporations and multinationals), short-term capital flows, international flows of workers and humanity generally, and flows of technology.” (Bhagwati, 2004) In the past few years this increasing integration within the world economies has promoted economic growth and been aligned with the substantial growth in world trade. On the one hand, globalization has been associated with the improvement of living standards within a society. As well as, simplifying the production process. However, this phenomenon could potentially act as a constrain to the societies well being, in addition to aiding the in the restrain of economic emergence. (Daniels, 2001) In this essay, the factors contributing to globalization will be illustrated in regards to the trade barriers and the emergence of MNCs. The benefits and costs of globalization will be demonstrated by evaluating the affects on employment and the impact on the business operations. The emergence of globalization has been due to several factors; one of the main drivers of a more integrated world economy...
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...Important Terms & Definitions | H2 Economics IMPORTANT TERMS & DEFINITIONS [ECONOMICS] Microeconomics 1. Introduction to Economics Scarcity Situation where limited resources available unable to satisfy unlimited human wants Opportunity Cost (OC) Cost of any activity measured in terms of next best alternative forgone Production Possibility Curve (PPC) Shows all different maximum attainable combinations of goods & services produced when all available resources are used efficiently at given state of technology Law of Increasing Opportunity Cost As more of a good is produced, more of another good has to be sacrificed in production Comparative Advantage When one can perform an activity at a lower opportunity cost than anyone else Law of Comparative Advantage Trade can benefit countries if they specialize in goods in which they have a comparative advantage 2. Demand & Supply Law of Demand Inverse relationship exists between price of good and quantity demanded of good, ceteris paribus Law of Supply Direct relationship exists between price of good and quantity supplied of good, ceteris paribus Price Elasticity of Demand (PED) Degree of responsiveness of quantity demanded of good to a change in its own price, ceteris paribus Income Elasticity of Demand (YED) Degree of responsiveness of demand to a change in income of consumers, ceteris paribus Cross Elasticity of Demand (XED) Degree of responsiveness...
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